Now, according to many market players, hedge funds are assumed to be bloated, outdated investment tools of an era lost to time. Although there are In excess of 8,000 hedge funds in operation today, this site focuses on the upper echelon of this group, about 525 funds. Analysts calculate that this group controls most of the smart money's total capital, and by tracking their best investments, we've unearthed a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as crucial, optimistic insider trading sentiment is another way to look at the marketplace. Obviously, there are plenty of reasons for a bullish insider to drop shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).
Keeping this in mind, it's important to discuss the newest info for Flagstar Bancorp Inc (NYSE:FBC).
Heading into Q3, a total of 12 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully.
According to our 13F database, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Flagstar Bancorp Inc (NYSE:FBC). D E Shaw has a $3.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On D E Shaw's heels is James Pallotta of Raptor Capital Management, with a $3.2 million position; 1.7% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Andy Redleaf's Whitebox Advisors, Mike Vranos's Ellington and Cliff Asness's AQR Capital Management.
Since Flagstar Bancorp Inc (NYSE:FBC) has witnessed dropping sentiment from upper-tier hedge fund managers, it's easy to see that there exists a select few fund managers that elected to cut their positions entirely last quarter. It's worth mentioning that Geoffrey Raynor's Q Investments (Specter Holdings) dropped the largest stake of the "upper crust" of funds we watch, comprising close to $18.8 million in stock, and Gregory Fraser Rudolph Kluiber and Timothy Kroch of GRT Capital Partners was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying made by high-level executives is most useful when the primary stock in question has seen transactions within the past six months. Over the last half-year time frame, Flagstar Bancorp Inc (NYSE:FBC) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to Flagstar Bancorp Inc (NYSE:FBC). These stocks are Brookline Bancorp, Inc. (NASDAQ:BRKL), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), Provident Financial Services, Inc. (NYSE:PFS), Kearny Financial Corp. (NASDAQ:KRNY), and Columbia Banking System Inc (NASDAQ:COLB). This group of stocks are in the savings & loans industry and their market caps resemble FBC's market cap.